Is dilution of a trademark a form of unfair competition?
Yes, dilution of a trademark can be a form of unfair competition. In California, the dilution of a trademark is prohibited by both state and federal law. By dilution of a trademark, we mean that a similar trademark is used in a way that undermines the power of the original trademark and makes it less recognizable. Examples of trademark dilution may include using an exact copy of the trademark in an unrelated product, using a similar trademark in an attempt to benefit from the goodwill of the original trademark, or using a trademark to make false claims about a product. California’s Unfair Competition Law, commonly known as the UCL, outlaws practices that are “unfair, unlawful, or fraudulent” and causes “injury to consumers, employers, or other business people.” According to the UCL, trademarks can be considered as property, so dilution of a trademark can qualify as a form of unfair competition. When a trademark is weakened, it’s value decreases and there’s a chance that customers may be confused or misled by the similarity between the original and the infringing trademark. For this reason, California law discourages this practice and holds that dilution of a trademark is an unfair trade practice and can result in civil penalties. Overall, dilution of a trademark amounts to a form of unfair competition and should be avoided by businesses. Under California’s Unfair Competition Law, businesses can be held liable for trademark dilution and may have to pay civil penalties for this violation.
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